Not even taxes are certain these days.
Coquitlam council is considering a tax program that would shield commercial properties from big tax hikes based on as-yet unrealized development potential. Businesses in an area zoned for more height or density sometimes end up paying taxes based on what could be on the property as opposed to what is there.
However, the new approach might not be an improvement, according to Coun. Brent Asmundson.
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“It’s not a system that is going to be fair,” Asmundson said, noting that tax breaks for some properties would mean bigger tax bills for other businesses in the same class.
As a growing municipality, Coquitlam has seen “escalating assessed property values,” including cases where a property is considered “under-developed” based on a land-use change.
The tax relief program – which is optional for B.C. municipalities – was spurred by the province passing legislation geared to help commercial property owners and tenants from paying for development potential. However, the province would have done better to increase staffing at B.C. Assessment rather than shifting the responsibility and the cost of the initiative onto municipalities, according to Asmundson.
“These proposals from the province, to a varying degree, are about shifting the cost of a problem to local government,” Asmundson said.
The view from Victoria
The program is designed help businesses and non-profits while giving municipalities the ability to identify properties affected by high-density development, according to Coquitlam-Maillardville MLA Selina Robinson, who was serving as Minister of Finance when the initiative was announced.
“Local governments have been asking for a tool to help support small businesses and non-profits in their communities under the weight of increasing costs,” Robinson stated in a release. “This new program will empower local governments to provide much-needed relief with an effective long-term solution that fits the individual needs of communities.”
The province’s legislation addresses a longstanding concern, according to Union of B.C. Municipalities president Jen Ford.
“Local governments were consulted as a part of the process of developing this legislation, and I welcome the province’s action to address this issue,” Ford stated in a press release.
Shifting the burden
A recurring problem is the issue of triple-net leases, in which a landowner saddles their commercial tenants with the tax increase, creating a system in which one party pays the taxes and other sees the benefit.
“Why did the province not just get rid of triple-net leases?” asked Coun. Craig Hodge, somewhat rhetorically. “If the owner of the property had to pay for the development potential for 15-20 years, they’d probably develop the property sooner.”
The city has “no ability” to ensure tenanted properties get tax relief, according to a city staff report.
Under provincial legislation, the city can require a property owner to notify their tenant of tax relief. However, the legislation “does not provide any ability to enforce this provision,” according to a city staff report.
‘Unlikely’ for 2023
The program will be in place for the 2023 tax year, according to a release from the province.
However, given the need for an in-depth analysis, legal review and public engagement, it’s “unlikely” the city would be able to roll out the program in 2023, according to a city staff report.
“At this time, staff are not in a position to fully understand the implications of [the legislation] and the various considerations and outcomes from launching such a program,” the report stated.
Other municipalities throughout the region are tentative about the tax relief program, according to city staff.
Coun. Dennis Marsden recuses himself due to potential conflict of interest stemming from “some business discussions” relating to the topic.
